Get started

Beartrap

Cancellation of “Head-and-Shoulders” Pattern. Bears trapThe "Head-and-Shoulders" (H&S) pattern is considered a powerful trend reversal indicator. However, it can also become very costly for new traders. Yesterday, the S&P provided a great example of H&S cancellation. Traders who entered short on the break-out of the shoulders line (and Monday's low) incurred losses after the price returned to the previous day's range and rallied all the way up. Such scenarios happen more often than you might think. To avoid being caught in such traps, it is important to consider two things: 1. Higher Level Context : In this example, the H&S pattern formed on the hourly time frame. But if we zoom out, we'll see that on the weekly chart, the price is in a strong uptrend, currently making new historical highs. This is a very bullish context, with buyers having full control over the price. 2. Price Behavior on the Break-out : Upon confirmation of a reversal pattern, you should expect sellers to jump in and drive the price down as fast as possible. It is "abnormal" to see the price returning to the previous range and gaining acceptance. This is a trigger that something is not right. Some people will add volume analysis on the break-out, but I’m personally not a fan of it, especially for SPY.
AMEX:SPYEducation
by hermes_trisme
Turning Traps into Profitable Opportunities ! TOP 3 PATTERNSTrading traps are a common occurrence in the cryptocurrency market. They can be created by a variety of factors, including market manipulation, technical analysis, and psychological biases. While traps can be dangerous for traders who are not prepared, they can also be a source of profit for those who know how to trade them effectively. In this article, we will discuss three common trading traps and how to trade them profitably. We will also discuss how traps are created and how they can be used to your advantage. What Are Trading Traps? Trading traps are false movements in the price of a cryptocurrency that are designed to trick traders into taking a position in the wrong direction. They can be created by a variety of factors, including: Market manipulation: Market manipulators may create traps to trick traders into taking positions that are in their favor. For example, they may buy a large amount of a cryptocurrency to drive up the price, and then sell it off quickly to create a sell-off. Technical analysis: Technical analysts may use traps to take advantage of traders who are following technical indicators. For example, they may create a false breakout of a support or resistance level to trigger stop-loss orders. Psychological biases: Psychological biases, such as fear of missing out (FOMO) and fear of loss (FUD), can also lead traders to fall into traps. For example, a trader who is afraid of missing out on a potential bull run may be more likely to buy into a false breakout. In the example above, LINK was trading in a horizontal range for several months. The price then broke below the lower range boundary, which was a sign of a potential bear trap. However, the price quickly reversed and re-tested the lower range boundary. This was a good opportunity to enter a long position, as it showed that the trend was still in place. How to Identify Trading Traps There are a few things you can look for to help you identify trading traps, including: Volume: A sudden increase in volume can be a sign that a trap is being set. This is because market manipulators or technical analysts will often need to buy or sell a large amount of cryptocurrency to create a false movement in the price. Price action: A false breakout or fakeout is often accompanied by a sharp reversal in price action. For example, a false breakout of a support level may be followed by a sharp sell-off. Technical indicators: Some technical indicators, such as the Bollinger Bands, can help you identify potential traps. For example, the Bollinger Bands may widen before a false breakout, which can be a sign that a trap is being set. How to Trade Trading Traps Once you have identified a trap, you can trade it in one of two ways: Long trap: If you believe that the trend will continue, you can enter a long position on the re-test of the breakout level. Short trap: If you believe that the trend will reverse, you can enter a short position on the break of the breakout level. Examples of Trading Traps 3.1 Triangular Trap Unveiled: Discuss the bearish implications of descending triangles in technical analysis and their potential use as manipulation tools. Explore how market manipulators engineer these patterns to trigger artificial stop-losses. Case Study: NEAR's Triangular Intricacies: Analyze NEAR's descent within a descending triangle and its unexpected breakout. Offer insights into the motives behind orchestrating such traps and how traders can leverage these market dynamics. Here are some examples of how trading traps can be created and traded: Shakeout trap A shakeout trap is a false breakout that is designed to trick traders into taking a position in the wrong direction. For example, a cryptocurrency may be trading in a horizontal range for several months. The price then breaks below the lower range boundary, which is a sign of a potential bear trap. However, the price quickly reverses and re-tests the lower range boundary. This is a good opportunity to enter a long position, as it shows that the trend is still in place. Fakeout trap A fakeout trap is similar to a shakeout trap, but it occurs after a trend has already begun. For example, a cryptocurrency may be in a bull market. The price then breaks above a resistance level, which is a sign that the bull market is continuing. However, the price quickly reverses and re-tests the resistance level. This is a good opportunity to enter a short position, as it shows that the bull market may be coming to an end. Reversal trap A reversal trap is when the trend of a market changes direction. For example, a cryptocurrency may be in a bull market. The price then breaks below a support level, which is a sign that the bull market is ending. However, the price quickly reverses and re-tests the support level. This is a good opportunity to enter a long position, as it shows that the bull market may be resuming. The Art of Spotting Fakeouts: Define the concept of fakeouts and unveil their potential as precursors to bullish movements. Offer insights into distinguishing genuine breakouts from manipulative traps set by market actors. Case Study: ZIL's Quick Turnaround: Uncover the Zilliqa (ZIL) chart, examining the deceptive fakeout beneath a pivotal horizontal level. Emphasize the strategic importance of waiting for a retest post-fakeout as a confirmation signal. Conclusion Trading traps can be a dangerous but profitable part of cryptocurrency trading. By understanding how traps are created and how to identify them, you can increase your chances of trading them successfully. Additional Tips for Trading Trading Traps Use stop losses: Stop losses can help you limit your losses if you are wrong about a trade. Be patient: Do not rush into a trade just because you see a trap. Wait for the
Education
by Yaroslav_Krasko
2
Cracking the Code of Bull and Bear TrapsHey Friends, let's dive into the captivating world of bull and bear traps. These traps can be quite the wild ride, so buckle up and get ready for some trading knowledge! A bull trap, my friends, is a sneaky maneuver by the market. It lures unsuspecting traders into believing there's a bullish breakout on the horizon. But guess what? It's a trap! The price quickly reverses and sends those traders into a tailspin, caught in a frenzy of false signals. Don't let the allure fool you! Now, on to the bear trap. It's the flip side of the coin, my friends. Just when you thought the market was about to take a nosedive, it surprises you with an upward surge. It's like a magician's trick, leaving all those who bet on a bearish breakdown scratching their heads. Bam! The bear trap strikes, and those traders find themselves caught in a bullish whirlwind they never saw coming. To navigate these treacherous traps, my dear traders, exercise patience and wait for confirmation. Don't jump the gun at the first sign of a breakout or breakdown. Look for additional indicators to support the move and keep a close eye on volume. Strong volume is the key, my friends! And don't forget to set those stop-loss orders, strategically placing them to protect your positions. Now, remember, studying market structure and learning from past mistakes is essential. Analyze historical traps, dissect their patterns, and absorb every little detail. The more you educate yourself, the better prepared you'll be to dodge those cunning traps in the future. So, my fellow traders, stay sharp, stay nimble, and stay ahead of those traps. It's a wild journey out there, but armed with knowledge and experience, you can conquer the trading world. May your trades be prosperous, and may you always stay one step ahead of those crafty bull and bear traps!
Education
by FortuneAI
1
Bull and Bear Traps!!!👨‍🏫Hello, dear traders🙋🏻; I am Pejman, and welcome to TradingView Tunes📺. As a lover of classic cartoons, I would like to explain Bull and Bear Trap using the Road Runner and Coyote cartoons😍. If you've never seen this cartoon👀, let me tell you, it's a masterpiece of trapping and pranking. But what does it have to do with financial markets🤷🏻❓ Believe it or not, there are some striking similarities between the traps Coyote🐺 sets for Road Runner🐦 and the traps that exist in financial markets💲. The market traps are known as bull🐮 and bear🐻 traps, and they can lead to significant losses if investors aren't careful.🙍🏻 For example, the Coyote paints🖌️ the road to drag the Road Runner to a suitable place and traps him with stones🪨 and TNT💣. Or he is trying to surprise the bird with TNT & cactus🌵, in another way.🤭 Large financial institutions and market makers, or whales🐋, try to deceive amateur traders in the financial markets. Like coyotes, they try to trap inexperienced people by creating fake buy🟢 and sell🔴 signals. To trade with these traps, you should know technical analysis to neutralize the coyote traps of the market like Road Runner.😉 In the financial markets, we have two types of fraudsters. Bulls are the ones who buy and cause prices to rise☝🏻, and on the contrary, bears are the ones who sell and make prices fall👇🏻. Simple enough, right😊❓ However, I explained more about bulls and bears in the market types post👀. You can refer to this post to better understand the rest of the article.👇🏻😉 Every hunter needs prey. For example, we said that the Coyote used to paint the roads. Exactly bulls, by pumping up the price and bears by a sharp drop in the price, fool the inexperienced people. Also, all these events are short-term. Like Road Runner, you have to pay close attention to the market⚠️. In this post, I will teach you how to turn threats into opportunities and profit from them.✅ The first step is to identify these traps. Our first trip today is the bull trap. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Bull Trap: Let's start with the Bull Trap🏁. This is when the market looks like it's on the up-and-up⬆️, so you start throwing money around like a looney tune💸. But just like Coyote's contraptions, the market can suddenly backfire and leave you feeling like you just got hit with an anvil💥. It's enough to make you want to go "meep meep" all the way home☹️🏠. Be like Road Runner and stay alert, or you'll end up with a crate of dynamite💣 strapped to your back. That's a bull trap in a nutshell. A bull trap is when the market appears to increase, so investors jump in, hoping to make a profit. But then, the market suddenly drops, and those investors are left holding the bag👜. They thought they were getting ahead of the game but were just falling into a trap.🪤 You may be fooled by the chart and expect the price to pump up, but in reality, the price will start to fall or act like a reversal pattern.↩️ At this time, those who traded without stop loss🚫 will lose the most. It would help if you watched out for these traps in any type, whether up, down, or sideways (range market). The price must be below a resistance zone for a bull trap to form a reversal pattern. A bull trap can change an uptrend to a downtrend after creating classic reversal patterns such as double tops, heads & shoulders, diamonds, etc.😉 If you want to know the patterns and learn classic patterns with a quick review⏩, you can get help from the following post. Now that you know this trap, we can talk about ways to recognize and deal with this trap. How to recognize the Bull Trap🔎 Sir John Templeton says: The four most dangerous words in investing are: "This time it's different."🤔 We may have said these words and confused real traps with fake traps. But how can you prevent this mistake?🤷🏻 Do you remember that we talked about fake and valid breakouts in the Support and Resistance post?💭 You can also read the link below for a background on this topic. Let's go back to our topic. To ensure that the breakout is valid, we should look for two confirmation signs✅️: 1. Increase in Trading Volume 2. Bullish candlestick patterns Now let's go through each one in detail because the devil👹 is in the details 😂. Increase in Trading Volume For the breakout to be valid, the volume📶 of the broken candle must be significantly higher than the previous candles. But more is needed because coyotes are clever and intelligent. Even after the breakout, the trading volume for the other candles should remain high to ensure the failure is real. In a bull trap, the volume of the fake breakout candles either does not increase or only slightly. If you see that the trend has lost momentum after breaking out or has no strong momentum to continue or start the trend, this is precisely the trail of coyotes in the market. Along with market volume, considering candlesticks and their patterns can be equally helpful as they clearly show market movement. You can take a look at the following post to learn about these candlestick patterns and review them. For example, by seeing bullish candlestick patterns, you can understand that a breakout is not fake. Bullish Candlestick Patterns: If the breakout candle is a giant momentum candle, it's called a Marubozu , which is not difficult to find on the chart. This candle has a green and long body, and its wick is tiny compared to its body, or it does not have a wick at all. This candle is associated with a high trading volume, and it shows that TNT is not working in this upward trend, and real buyers are in the market. Also, the pattern of the 👩‍🚀👩‍🚀👨‍🚀 Three White Soldiers 👩‍🚀👨‍🚀👩‍🚀 is a reversal pattern that can be seen as a continuation pattern in the charts. Along with all these signs, you should always keep the market trend in mind. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Bear Trap: Next up is the Bear Trap. This is when the market looks like it's going to crash💥 and burn🔥, so you start selling your assets like there's no tomorrow. But just like Coyote's rockets, the market can suddenly bounce back and leave you feeling like you just got flattened by an Acme anvil. Don't panic! Be like Road Runner and stay calm, or you'll fall off a cliff. Bear traps are similar to bull traps. Young and inexperienced bears🐻 are caught in these traps. When the young bears think the market is going down, these traps are activated, and the hunters place heavy buy orders. At this moment, this heavy order will cause the price to turn upward, and anyone who has a short position without a stop loss will lose their money💸. A trap is a trap, and it doesn't matter if it is a bear or a bull🐮. Here we use the duplicate confirmations we used in bull traps, like a steady increase in trading volume and continuation candlestick patterns. When a support zone is broken, hunters prepare to set traps. If the bearish momentum candle is not accompanied by increased trading volume, this can be a sign of a trap. The ⚫️⚫️⚫️ Three Black Crow ⚫️⚫️⚫️ candlestick pattern is usually a reversal pattern but sometimes acts as a continuation pattern. If a high trading volume accompanies this pattern, it can be a valid sign of a breakout. Now I will tell you how to use these traps (Bull&Bear) and get profit from them like a professional trader. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- How to trade with a Bull Trap The bull traps start with an uptrend. As you can see the picture has a resistance zone, and the price may test a zone several times before passing it. When a fake breakout occurs, it may initially be accompanied by an increase in trading volume, but it is entirely temporary, and you will notice a decrease⤵️ in the intensity of the trend from the next candles. When the intensity of the trend decreases, market coyotes activate their traps. And they set sell orders, and the bloody🩸 candles appear on the chart. With a valid breakout of the last support, the price reaches our entry point station⛽️. You can place your stop loss a little higher than the top of the bull trap and place your stop loss🚫 above the breakout candlestick of the support zone, considering the higher Risk-Reward ratio. To find the take profit💰 point, consider the difference between the peak trap and the support zone as X, and Viola, now expects X amount to profit from your entry point. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- How to trade with a Bear Trap Now it's time for the second trap. After occurring a valid support zone breakout and an increase in price, you must wait for the price to break through the last resistance zone after a sudden sharp move. When you can use the signs⚠️, you are sure that the coyotes have abandoned the process, that there is no trap🪤, and that real failure has happened; you can open your long positions. Now, this passed resistance zone has turned into support, and you can wait for the price to test this area several times for more confidence and then open your entry point. Like trading in bull traps, in bear traps, you can place your stop loss a little below the valley of the bear trap. Considering the higher Risk-Reward ratio, you can also put it below the breakout candle of the resistance zone. The take-profit point is the same as the bull trap, but vice versa. Consider X from the lowest price in the bear trap and the resistance zone. Now, as much as X, we can expect that the upward trend will continue and precious dollars will rain on our heads. Now that you have learned about the bull trap🪤 in an uptrend and the bear trap in a downtrend↘️, you should remember that the market is not always up🔺️ and down🔻, and the road runner should also expect traps on the range roads. You should be aware of bull/bear traps in the range market. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Range Market When the price gets stuck between the support and resistance zones, the range market is created, and the coyotes also look for inexperienced road runners in this market. This is a sad story for new traders who rush into positions when they see the resistance or support zone break. Price fluctuations in range markets are minor; trading in a range market is much more complex than in bull and bear markets. So I suggest you spend more time on your trading strategies and test them several times. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Conclusion: Even in life, some coyotes seek to trick you by creating fake situations. But you have to be careful and smart like Road Runner. Sir John Templeton believes that: "Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria." And also, David Dreman says: "Bear markets are like avalanches: they start slowly and accelerate gradually before gaining momentum and becoming a force of nature🏞." In the financial markets, bulls and bears are constantly fighting each other, but the real winners are always those who use various tools and indicators to avoid risk and find safe spots for trading and profit. Once you practice and familiarize your eyes with all kinds of trends and traps, you will become a road runner in the market. So, if you want to be like the clever road runner and avoid falling into the bull and bear traps in the financial markets, stay alert, stay informed, and be prepared to adapt your investment💰 strategy when necessary. In future posts, we will take new steps in technical analysis and travel to the world of classic patterns. So follow the future posts and share your opinions and ideas in the comments. Your comments🎓 are precious to me. Also, if you have friends👬👭 who are into classic cartoons🎆 and trading, send them this post.
Education
by pejman_zwin
10
How to use "Auto Trendline and Breakout Alert" IndicatorIn this tutorial, we will learn how to use the "Auto Trendline & Breakout Alert (Linear / Log)" indicator. Note: You can find it in the scripts section of my profile Auto Trendline & Breakout Alert(Linear / Log) Full-Version by BobRivera990 Overall Introduction This indicator is the best tool for breakout traders. Drawing and evaluating the trend lines of multiple charts in different time frames is a very time-consuming and tedious task. In addition, being aware of breakouts in the shortest possible time requires constant monitoring. With this tool, you can draw and classify trend lines in a fraction of a second and by placing an alert on any chart, you can receive notifications about breakouts, wherever you are. The classification of trend lines is done based on the reaction of the price chart to the trend lines and the analysis of the trading volume . This indicator is designed to reclassify trend lines with each reaction of the price chart. These lines are classified into 6 levels and these levels are distinguished by different colors. Thus, any touching or crossing of the price chart can make a difference. Features This indicator is designed for use on both linear and logarithmic scales. It works linearly by default. If you are using a logarithmic chart, enter the settings menu and set the chart scale parameter to “Log”. The indicator is equipped with the volume status tool to identify and avoid false breakouts. Note that you can't completely avoid false breakouts, but you can minimize risk and loss. I have already published volume status as a separate script. Several filters are provided to customize alerts. You can limit alerts based on the level and strength of broken trend lines , volume status, and type of breakout (Cross-Over, Cross-Under, or both). The last breakouts panel gives an overview of the current market situation. You can activate it in the settings menu. the figure below shows the panel: How to setup There are many parameters in the settings menu, but two are more important. One is “Chart Scale” and the other is the “Max Operational Range Length". Set the “chart scale” parameter according to the chart, otherwise the trend lines drawn by the indicator do not match the price chart. If you are using a linear chart, select the "Linear" option or if you are using a logarithmic chart, select the "Log" option. Max Operational Range Length Limits the range of the price chart that is processed by the indicator. By increasing this parameter: The strength and durability of the trend lines increases. The number of breakout signals decreases. The importance of breakout signals increases. The indicator processing load increases. The best range for "Max Operational Range" is from 300 to 1200,Change it until you get the best view possible. Also by changing the "Filter" parameter from 1X to 5X, you can reduce the clutter in the chart. The following figure shows the results of correct and incorrect settings: Use it well...
BEducation
by BobRivera990
28
Stop Loss HuntingInstitutional investors have a profound impact on financial instruments prices because of their large volume trading activities. They can greatly impact the price of financial instruments, however making a material impact and hence decreasing liquidity to the point where there may be no one to take the other side of the trade is not something they desire. To fill their large in size orders with better price levels, Institutional investors need liquidity, they cannot just enter a trade at once, but they split trades over time and slowly have to build a position by hunting for liquidity. One of their strategic approach and the best way to get liquidity without making a material impact of the price and get filled in better price levels is Stop Loss Hunting . A stop-loss order is an order placed to buy or sell a financial instrument when it reaches a certain price with the aim to limit loss on a position or protect profits. Where do we usually place our stop orders? For a long trade example, usually we set them just below a support level, a trend line, a longer-term moving average, previous day low or a specific ATR percentage etc, which are highly predictable. Institutional investors simply need to trigger stop loss orders of thousand of traders and since a key level is borken new traders joins by entering positions, making them take trades in the wrong direction, which as a result creates a huge supply with enough liquidity to absorb Institutional investor's demand with better prices Some examples Stop Loss houting can be observed frequently
Editors' picks
FX_IDC:XAUUSDEducation
by dgtrd
212
Bitcoin Whales And Their Bots Controlling The MarketA few days ago i said i would make an educational analysis about that pattern i saw a few days, something i have seen many MANY times this year. Especially since May until September this year. What do we see here: After breakouts like we had a few days, where we see a squeeze up happen within 1 or 2 minutes, then we see a dump happen just as fast and usually around 50% of the up move. The most important factor, is the speed of the push down. These are bots in action because nobody can react that fast AND feel so confident to push the price down during a squeeze up, unless you know you have unlimited funds and volume to play with. The only time i know they failed, was in July, when the 6800 broke and we squeezed up to the 7.500. If you remember, i mentioned that several times, because since that moment, it took a while until they showed up again. There were around 200 mil contracts liquidated that day :) After the push down has been made, we usually see a small bear flag forming, like they are getting a feel of the buying pressure of the market before they start to make their second push down. A few days ago, the buy volume was probably still too strong to we tested the high again, something that didn't happen earlier this year. So there is a slight change in that pattern. Today's move, which i warned for yesterday was only a 30/40 point move up. But the push down fits the profile i described. And since we are at lower prices now, it might be fair to assume they are at it again. What and why do they do it. Why? They play games with over leveraged traders. We always get these obvious resistance or support levels. If it's a bull or bear flag or trend line breakouts. So many traders who are breakout traders go long at these highs while THEY have their short orders already in the book ready to get filled. Then they push the price down just as fast, putting these bulls under immediate pressure. They wait and see a bit how the rest of the market reacts, if they see buying volume dropping, they start to push the price down even more. Because they trapped these breakout traders, they use THEIR volume as their own, because as soon as these over leveraged traders start to get in a loosing position, they will cut their losses and start to sell as well (or get liquidated which has the same result). So creating volume (fuel) for these whales. And if the market is not strong enough to catch the volume of both of these sellers, we start to see those Bart moves and the market starts to drop again. You probably remember this chart i showed a week ago, before that move up happened and dropped again. This is a bigger version and a different pattern but it's the same tactic. In case you wondered how the hell did i know it would move like that, well know you have your answer :). Of course it is an assumption upfront and it's not that easy, but it does increase your odds in trading when your aware of these kind of things. If i get a big support for this educational analysis through likes, i will make a part 2 and will show you examples of these patterns. It takes me many hours to make these kind of educational posts, so i will only continue when i see enough people find it interesting. I also still have that long term (with log trend lines ) educational post, i am half way but still needs a lot to complete it. I might post that one as well in the near future. Maybe some will finally see and understand the false preferences most TA analysts tell you. Not on purpose, they simply don't know any better. Now i don't need to prove my right with this and i won't even try, it's up to you to make your own conclusion. But i think the fact 90% of retail traders looses money in the financial markets says more than enough. The chart is here below, probably finished but i might still adjust it a bit I can see only 1 solution for this manipulation, that is combining the volume of all exchanges in 1 order book. Because then they would much more volume to push the price around. Now they only need 1,2 or 3 exchanges and the rest will follow since there are so many bots reacting automatically. Combining all the volume , would make it MUCH more difficult to control. Not impossible, because the same manipulation happens on the normal markets as well. So in other words, the decentralization of crypto is actually biting it in it's own ass when you think about it. Very unfortunate, but it's the hard truth. Please don't forget to like if you appreciate this :) Previous educational analysis:
BITSTAMP:BTCUSDEducation
by botje11
124